Why does international container freight rate rise wildly？

Since this year, the international container market freight rate continues to rise, to the international logistics transport and trade has a huge impact.

By the end of August, China's export container freight index has reached 3,079 points, up 240.1% from the same period in 2020, more than double the record high of 1,336 points before the latest rise.

This round of price rises is broader. Before 2020, the increase in container market freight rates was mainly concentrated in some routes and some periods, but this time, the general rise, Europe line, the United States line, Japan and South Korea line, Southeast Asia line, Mediterranean line and other major routes increased 410.5%, 198.2%, 39.1%, 89.7% and 396.7%, respectively, compared with the end of 2019.

Freight rate rise 'unprecedented'

From the perspective of supply, the operation efficiency of ships has declined significantly due to the impact of COVID-19. Countries have stepped up efforts to prevent and control imported cases at ports, extended the berthing time of ships at ports, and reduced the turnover efficiency of container supply chains. The average increase in port time for ships is about 2 days, and for Ships in North American ports, it is more than 8 days. The decline in turnover has upset the original balance, leaving a supply deficit of about 10 percent compared to 2019, when the basic balance of supply and demand was slightly surplus.

The continuing shortage of crew is also exacerbating the shortage. The complicated epidemic situation in major seafarers such as the Philippines and India, coupled with crew shift change and quarantine, has led to a continuous rise in crew costs in the maritime market.

Disturbed by the above factors, the normal relationship between market supply and demand reversed rapidly, and container liner freight prices continued to rise sharply.

Statistics from UNCTAD, China's Customs and ports show that from before the outbreak to July this year, more than 80 percent of global trade was carried out by sea, while the proportion of China's imports and exports by sea increased from 94.3 percent before the outbreak to 94.8 percent now.

"Cabin hard to find" when to ease

Soaring freight rates are not only disadvantageous to trading enterprises, but also bring great risks and uncertainties to shipping enterprises in the long run.

International shipping giant CMA CMA has made it clear that it will stop the spot market rate increases from September this year to February 2022. Hapag-lloyd also said that measures have been taken to freeze rates.

"It is expected that the end of 2021 will usher in the market freight peak inflection point, then freight will gradually enter the correction space, of course, can not rule out the impact of the uncertainty of emergencies." Shanghai International Shipping Research Center chief consultant, director of the International Shipping Research Institute zhang Yongfeng said.

"Even if supply and demand fully recovers to 2019 levels, it will be difficult for freight rates to return to 2016 to 2019 levels due to the rising costs of various factors." Jia Dashan said.

Considering the current high freight prices, more and more shippers are inclined to sign long-term agreements and lock up freight rates, and long-term agreements are gradually increasing in the market.

Government departments are also making active efforts. It is understood that the Ministry of Transport, the Ministry of Commerce and other relevant departments have implemented active promotion policies in expanding container output, guiding liner companies to expand capacity, improving logistics service efficiency and many other aspects to ensure the stability of the international industrial chain and supply chain.